Blog | February 13, 2013

Who's Going To Fund Retail's Shift To The As-A-Service Model?

One of the hottest topics at the recently-held RSPA INSPIRE conference was the services model. Understand, I'm not talking about offering services to your customers. Rather, I'm referring to combining your offerings (hardware, software, security, support, payment processing, remote monitoring, etc.) into bundles for which you can charge your customers a monthly fee. Let's call it POS-as-a-Service (or P-a-a-S?).

In a previous blog post, I detailed exactly how much more money a VAR could make in this model. But there's a caveat. Switching to this model means that those lump sums of revenue you'd get from a new install are split up into payments that can span years. The question then becomes, how can VAR's afford to make this switch even if it is the smartest long-term move?

The quick answer is that you don't have to go all in. Rather, you can slowly migrate customers or take one every so often and, over time, build up your recurring revenue from this POS-as-a-Service model. But that's not a good answer if you want to really experience the benefits of this model sooner rather than later.

Enter the conversation at INSPIRE. During a workshop assignment, the collective room (including VARs, vendors, processing companies, and distributors) talked about the challenges the retail industry faces. One VAR said they needed help from the vendors to get paid up front. Vendors and distributors, like VARs, are also used to getting paid in one lump sum for the cost of goods. They're not in a much better position to get paid over years.

One group that might have an answer is the merchant processing folk. Heck, it's the need to compete with the Harbortouch model of "free" POS that's accelerated this discussion in some ways. Using that concept, some processing companies are rumored to be willing to help merchants pay for a new POS system through their VARs. As opposed to the Harbortouch model where you only have them as the hardware and software option, VARs can build a system using whatever hardware and software they want. The monthly payment for this solution comes out of the merchant's monthly processing fees. Sounds great, but at this point, I'm not sure if this is something the processing companies are looking to roll out full-scale or even admit to their vast number of VARs that they're willing to do.

So, today, unfortunately there's nothing more than a lot of questions around who's going to help pay for this new way of doing business.

Whoever's first to figure out how to get everyone comfortably paid is going to be a channel champion.